The American Spectator

Special Report

The Poor's Mosquito Net

By Doug Bandow on 6.16.05 @ 12:09AM

NIAS ISLAND, INDONESIA --The flotsam of disaster was everywhere: trash, bricks, splintered wood, household effects, clothes, debris. Buildings by the ocean were mostly leveled. Across the road several structures survived, barely: only their side walls, perpendicular to the water, still stood. Plastic sheets replaced missing walls.

Known for its idyllic surfing, Indonesia's Nias Island suffered from the December 26 tsunami even before the more recent, devastating earthquake. The island's losses -- hundreds of dead, thousands of homeless -- were small compared to the casualties on much larger Sumatra Island next door. But the human suffering was the same.

International assistance largely passed by Nias. The hotels in Sumatra's Medan, a short hop away from devastated Banda Aceh, were full of aid workers from a dozen nations and scores of agencies, public and private. Traffic into Gunung Sitoli on Nias was much less.

But small private organizations stepped in to meet what were still very real, public needs. Shortly after the tsunami Jim Jacobson, president of Christian Freedom International, a lean humanitarian group based in Front Royal, Virginia, made the lengthy trip to Nias, an overwhelmingly Christian island in an equally overwhelmingly Muslim country.

CFI had to surmount the administrative challenge of transporting donated goods to a distant, rugged island, and then on to a disaster area on the west coast separated from east coast air and port facilities by a crude road. Nearly impassable to anything other than a four-wheel drive vehicle, the 80 kilometer drive took four hours.

The recent earthquake, damaging Binaka airport and destroying homes, businesses, and other buildings all over the island, attracted more international attention, but has simultaneously made the challenge even greater. In response, CFI is drawing on surplus goods collected earlier while stepping up collection of medicine, tools, blankets, clothing, and other items -- even children's toys.

Multiple disasters afflicting Southeast Asia have brought the problem of international poverty to the fore. Indeed, the tsunami triggered a competition among governments over aid promises. Here, as elsewhere, politicians used public funds to bid for international favor.

Assuming the money is used well, there seems little harm in a charitable competition to help people in need. But too often government-to-government aid is not used well. Indeed, the last half century has seen wealthy nations pour hundreds of billions of dollars into the developing world with little positive result. Much of the money has been stolen. Even more has been wasted.

Little has been used to promote long-term productive economic growth. More often than not politicians have established prestige projects, such as capital cities, national airlines, and heavy industries. State companies have been used to promote full employment; borrowers and lenders alike have favored creating new roads and buildings rather than repairing old ones.

Even more important, absent market reforms, economies won't develop. Prosperity and growth correlate with economic liberty, nothing else. Not aid levels, not resource endowments, not population densities. Giving money to incompetent socialist politicians benefits no one.

Worse, transfers often have hindered reform by relieving the price of economic failure. Ruling regimes routinely use foreign aid to remain in power even as they impoverish their peoples. A similar problem is evident today in Iran, as abundant oil revenues have discouraged the government from bargaining away its apparent nuclear weapons program for economic aid from the West.

Over the years the awful record of official assistance has become undeniable. Multilateral development banks, such as the International Monetary Fund, now attempt to justify their activities as market reforms.

Yet the illusion that government-to-government aid can create prosperity persists. Jeffrey Sachs, who is leading the U.N. Millennium Project, proposes spending about $200 billion annually on a grand new initiative.

World central economic planning is to succeed where national central economic planning has failed. Sachs believes that if he can cover the developing world with mosquito nets, malaria will be conquered. Give him enough fertilizer and the fields will bloom; enough drugs and disease will disappear. "We are in a position to end extreme poverty within our generation," he confidently proclaims.

Alas, though Sachs is bright and dedicated, his rhetoric harkens back to the 1970s, when Robert McNamara ruined the World Bank by vastly increasing loans with no concern as to whether or not the money was used well. As a result, scores of poor states ran up huge debts while ending up poorer than they had been at the start. Indeed, real per capita GDP in Sub-Saharan Africa was lower in 2000 than in 1970.

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